DAX Hits New Record 25,827 in Holiday-Shortened Session; Weekly Gain of 4.5% Best Since April

German DAX index hits new all-time high, gaining 0.78% to 25,779 points, fueled by reform package and Fed rate cut bets. Energy stocks lead, tech slips, Rheinmetall drops on cancelled frigate order.

The German blue-chip index charged to a fresh all-time high on Friday, ignoring the absence of direction from Wall Street, which sat out the session for the US Independence Day holiday. The DAX closed at 25,779.31 points, up 0.78% on the day, after touching an intraday record of 25,826.78. The advance capped a week that delivered a 4.49% gain — the strongest weekly performance since April, pushing the year-to-date return to just over 5%.

Trading volumes were roughly a quarter below the monthly average as US investors stayed on the sidelines, but that did little to dampen the mood. The rally was fuelled by a combination of the government’s new reform package in Berlin and sustained expectations of a Federal Reserve rate cut later this year. The underlying narrative has shifted toward cyclical sectors, with capital rotating back into German equities after international investors had been underweight the country for some time, according to DZ Bank. Andreas Lipkow of CMC Markets described the momentum as self-reinforcing, citing increasing conviction in automakers, chemicals and engineering stocks.

Energy stocks lead, tech takes a breather

On the sector front, utilities stole the spotlight. E.ON soared 3.78%, the best performance in the index, as falling bond yields made defensive dividend plays attractive again. RWE added 1.7%. Cyclical heavyweights Volkswagen and Siemens also drew strong buying interest on hopes of an export-led recovery.

The tech segment, however, ran into profit-taking. After a recent surge, SAP slipped nearly 2%, while Scout24 dropped 2.08%, the steepest decline in the index. The broader market breadth remained positive, with almost all DAX constituents closing in the green.

The exception was Rheinmetall, which tumbled 2.7% after the defence ministry cancelled an order for the F126 frigate. The company is now assessing potential revenue losses of up to €300 million for the current year.

European peers also hit records

The DAX was not alone in its advance. The eurozone-wide EuroStoxx 50 rose 0.8% to a new all-time high, and Switzerland’s SMI also notched a record. London’s FTSE 100 managed a more modest 0.25% gain. In Frankfurt, the mid-cap MDax outperformed the blue chips, climbing 1.38% to 32,994.37 points.

Technicals still pointing north

Chart analysts note that the index now trades 4.4% above its 50-day moving average, while the Relative Strength Index stands at 66.3 — well into bullish territory but not yet flashing an overbought warning. DZ Bank reiterated its year-end target of 27,500 points, implying roughly 7% upside from current levels.

What’s on deck for the week ahead

The coming days bring a light economic calendar. Monday will see the release of German industrial orders, with economists forecasting a month-on-month increase of 0.7%. Later that day, the ISM services index for the US is due. The main event arrives Wednesday evening, when the Federal Reserve publishes the detailed minutes of its latest policy meeting. Investors will scour them for any concrete timetable for the long-awaited rate cut.

Helaba summed up the mood with a football analogy: “For the German national team, the tournament is already over, but in equities, the second half has only just begun.” The question now is whether the rally can carry the DAX to 26,000 — a level that depends on two key factors: whether Wall Street returns from its break with fresh buying, and whether the rotation toward cyclicals and utilities has staying power.